Good morning and thank you for joining the Darling Ingredients Third Quarter 2022 Earnings Call. Here with me today are Mr.

Randall C. Stuewe, Chairman and Chief Executive Officer; Mr.

Brad Phillips, Chief Financial Officer; Mr. John Bullock, Chief Strategy Officer; and Ms.

Sandra Dudley, Executive Vice President of Renewables and US Specialty Operations. There is a slide presentation available on the Investors page under the Events and Presentations on our corporate website.

During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could materially differ, because of factors discussed in yesterday's press release, and the comments made during this conference call, and the Risk Factors section of our Form 10-K, 10-Q and other reported filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

Now, I will call over to Randy.

Thanks, Suann. Good morning, everybody, and thanks for joining us for our third quarter 2022 earnings call.

Darling Ingredients reported a strong third quarter financial results. This was created by our more than 14,000 employees around the globe.

I'm so proud of the Darling Ingredients family, particularly those who are new to us from Op de Beeck, Valley Proteins and the FASA Group. In August, I took our Board of Directors to visit several of our new facilities that came with the Valley Proteins acquisition.

I cannot be more proud of the dedication, pride and transparency I saw from our new Darling employees, as they work hard to integrate into our business. A few weeks ago, I was at our new Op de Beeck facility in Belgium, the green energy facility we acquired last spring.

I was able to see firsthand the ingenuity, the entrepreneurship and commitment from our new employees and it's truly remarkable. While I have not yet had the chance to personally see our new employees at the FASA Group in Brazil, I know how hard they are working as we bring our businesses together.

The success of our company begins with our people, as I made my way to many of our factories across the US and Europe this summer, I saw a tremendous amount of energy from our employees, who are constantly looking for ways to make our company safer, our plants more efficient, better for the environment and ultimately more profitable. I can absolutely say our team now understands their role in an evolving ESG world.

Now, turning to the third quarter. Extremely hot weather in North America, escalating energy prices in Europe, a one-time inventory step-up charge from the FASA acquisition and foreign currency translations impacted our base earnings this quarter.

Our Global Ingredients business came in at $274.4 million in EBITDA. The Feed Ingredients segment ended the quarter at $198.6.

Our Specialty Food Ingredients segment had another record quarter posting $68.2 million in EBITDA. And our fuel segment earned $143.4 million for the third quarter with $120.3 million coming from Diamond Green Diesel.

Turning to the Feed Ingredients segment. Globally, raw material volumes were up 39.6% quarter-over-quarter and 21.8% year-to-date.

Summer heat and regional droughts made raw material quality a challenge and processing difficult, the results were lower grade fats with DGD not ready to accept, and these fats had to be discounted to be sold in North America. However, both domestic and export demand for North American and European proteins was exceptional in the third quarter.

We continue to see strong export demand for our Brazilian and European fats, as demand for low carbon intensity feedstock for renewable diesel continues to grow. Container availability improved in the third quarter and is expected to continue to improve in the fourth quarter.

Energy costs in Europe continue to be challenging more than doubling year-over-year. However, we've made raw material procurement adjustments and have recovered 85% to 90% of these costs now going into fourth quarter.

Valley Protein facility struggled during the quarter. As we have openly discussed, we are making progress bringing these facilities up to our standard, but converting from a run-to-fail mode will take a bit of time.

Summer was brutal. Ultimately, as we bridge the margin variance in the Feed segment, it was Valley Proteins plant, animal fat price discounts, foreign exchange and the FASA inventory step up, all of this is behind us going into fourth quarter.

On November 2, we announced that we entered into a definitive agreement to purchase the Polish rendering company, Miropasz Group, for approximately €110 million. Miropasz process is around 250,000 metric tons annually through three large poultry rendering plants in Southeast Poland and has around 225 employees.

The acquisition will provide a nice bolt-on to our existing three plants in Central and Western Poland and displays our commitment towards building our global supply of low-carbon feedstocks as global demand for low carbon intensity renewable diesel continues to grow. Our Specialty Food Ingredients segment had another record quarter earning $68.2 million in EBITDA.

Our continued product mix shift from gelatin to collagen peptides, helped drive margin and EBITDA improvements. We are very encouraged about the future growth in our Food Ingredients business.

We expect the collagen peptides market to double in the next five years. We have additional collagen capacity coming online in early 2023.

If you reference the chart in our earnings slide deck, you will see a performance in the Food segment that tells the story of why we are growing with our global customers in the peptide space. On October 18, we announced that we entered into a definitive agreement to acquire all the shares of Gelnex, a leading global producer of collagen products for approximately $1.2 billion in cash.

Headquartered in Brazil, Gelnex has six facilities, four in Brazil, one in Paraguay and one in Portage Indiana in the USA with the capacity of around 46,000 metric tons to produce gelatin and collagen peptide products. Gelnex is a very well-run business and will increase our production capacity for grass-fed bovine collagen in South America.

When this acquisition is completed, most likely in the first quarter of 2023, Darling Ingredients will operate 17 state-of-the-art collagen facilities on our four continents around the world. Now moving to our Fuel segment.

We saw strong volumes this summer from our European brand Rendac, which collects fall in animal stock and convert it into green energy. In our waste -- food waste to energy business expansion plans at our newest Green Energy facility optibet are now underway.

On October 31, we closed the acquisition of Jajang recycling, a collector and trader of organic waste based in the Netherlands. This strategic acquisition provides Darling Ingredients with additional feedstock for its full biogas plants in the Netherlands and Belgium.

Our green energy business in Europe is delivering as planned and we continue to believe in green energy in Europe and it will provide superior returns and help diversify our European assets. In the third quarter of 2023, Diamond Green -- 2022 sorry, Diamond Green Diesel sold 190 million gallons of renewable diesel and recorded $1.26 per gallon in EBITDA.

Year-to-date the joint venture has sold 545.5 million gallons of renewable diesel at $1.09 average EBITDA. Now, we've begun commissioning the unit at Diamond Green Diesel 3 in Port Arthur Texas.

The catalyst was loaded and we expect to be online in mid-November with a ramp up to capacity shortly thereafter. For the full year, we are forecasting approximately 800 million gallons of renewable diesel to be sold at Diamond Green Diesel 1, 2 and 3 and are estimating $1.10 EBITDA for the final part of the full year.

Now with that, I'd like to turn it over to Brad to take us through the basics on financials and I'll come back and talk about our outlook for 2022 and beyond. Brad?

Thanks, Randy. Net income for the third quarter 2022 totaled $191 million or $1.17 per diluted share, compared to net income of $146.8 million or $0.88 per diluted share for the 2021 third quarter.

Net sales were $1.75 billion for the third quarter of 2022 as compared to $1.19 billion for the third quarter 2021 or a 47.4% increase in net sales. Operating income increased 30.4% to $268.3 million for the third quarter of 2022 compared to $205.7 million for the third quarter of 2021, primarily due to a $50 million increase in the gross margin from our Global Ingredients business and a $49.5 million increase in Darling's share of Diamond Green Diesel earnings.

SG&A increased $70.8 million quarter-over-quarter and depreciation and amortization increased $27.2 million due to the FASA and Valley Proteins acquisitions. In the third quarter of 2022, we incurred $4.5 million in acquisition and integration costs, primarily related to our acquisitions of Rotebek [ph], Valley Proteins and FASA as well as the previously announced pending Gelnex acquisition.

During the third quarter of 2022, the euro weakened against the US dollar as compared to the third quarter of 2021. The foreign currency exchange impact for Q3 was approximately negative $18.4 million, using an average rate assumption of $1.01 in Q3, 2022, as compared to the average rates of Q3 2021 of $1.18.

For the nine months ended October 1, 2022, the foreign currency exchange impact was approximately negative $41.6 million using an average rate of $1.06 compared to an average rate of $1.20 for the nine months ended October 1, 2021. Interest expense increased $24.4 million in the third quarter of 2022, as compared to the third quarter of 2021, primarily due to increased debt.

We also incurred a $2.5 million charge due to a fire at our Tacoma rendering facility. Now, turning to income taxes.

The company recorded income tax expense of $35.2 million for the three months ended October 1, 2022. The effective tax rate is 15.5%, which differs from the federal statutory rate of 21% due primarily to biofuel tax incentives and the relative mix of earnings among jurisdictions with different tax rates.

For the nine months ended October 1, 2022, the company recorded income tax expense of $108.6 million and an effective tax rate of 15.6%. The company also paid $88.9 million of income taxes as of the end of the third quarter.

For 2022, full year, we are projecting an effective tax rate of 18% and cash taxes of approximately $25 million to be paid the remainder of this year. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes a new 15% alternative minimum tax based upon book income, a 1% excise tax on stock buybacks and tax incentives for energy and climate initiatives, among other provisions.

The provisions of the IRA are generally effective for periods after December 31, 2022, with no immediate impact to our income tax provision or net deferred tax assets. We do not currently expect the new book minimum tax and/or excess tax on stock buybacks to have a material impact on our future financial results.

The Blender tax credits, which are refundable excise tax credits, have been extended two years through December 31, 2024. After 2024, the clean fuels production credit, a nonrefundable income tax credit, becomes effective from 2025 through 2027.

We are assessing these tax incentives which could materially change our pre-tax or after-tax amounts and impact our tax rates in future years. We will continue to evaluate the applicability and effect of the IRA as more guidance is issued.

Now turning to debt. The company's total debt outstanding at the end of the third quarter 2022 was $3.28 billion as compared to $2.91 billion at the end of the second quarter.

Our bank covenant leverage ratio ended the quarter at 2.48 times. The increase in debt in the third quarter was primarily a result of the acquisition of the FASA Group.

We continue to maintain strong liquidity with $1.35 billion available on our revolving credit facility as of quarter end October 1. Capital expenditures totaled $105.6 million in the third quarter and $257.1 million year-to-date.

We received a $90.5 million cash dividend from the Diamond Green Diesel joint venture during the third quarter. The company also repurchased approximately 609,000 shares of its common stock for $37.2 million during the third quarter, which brought the year-to-date total shares repurchased to $1.58 million for $103.1 million.

We completed two delayed draw term loans during the third quarter, which are intended to be drawn to complete the Gelnex purchase upon regulatory approval. Additionally, we issued $250 million of additional 6% senior notes due 2030 with the same terms as the previously issued $750 million 6% senior notes.

With that, I'll turn it over to you, Randy.

Thanks, Brad. Throughout the year, we continued to strengthen our diversified portfolio through accretive acquisitions that will enable long-term growth in our specialty ingredients and green energy businesses, all by turning animal byproducts and food waste into sustainable ingredients to feed and power the world.

Today, one in every 6.5 slaughtered animals is processed through one of our 270 factories around the world. The strategic investments we have made in all three of our business segments are delivering sustainable solutions to feed a growing population while also helping the world achieve its decarbonization goals.

We were a first mover into the renewable diesel market and continue to be one of the only vertically integrated renewable diesel producers in the world. Darling Ingredients carries tremendous momentum into the final months of 2022.

Raw material volumes remain robust. Fat prices reflect their carbon value while DGD3 begins to ramp up.

Global Specialty Protein demand and pricing continues to be solid. Collagen peptide demand continues to grow.

Higher energy prices around the globe are being absorbed and adjusted for. Darling Ingredients is set to deliver another record year.

We'd like to reaffirm our forecast of $1.55 billion to $1.6 billion in combined adjusted EBITDA for the full year of 2022. Now, we are not showing any signs of slowing down into 2023 in our Global Specialty Ingredients and Green Energy platform.

Demand for our ingredients and inputs remains rock solid. We are busy integrating our new acquisitions and the results will become more visible in 2023.

The DGD portfolio of facilities ready to, deliver over 1.2 billion gallons of renewable diesel next year. Our collagen peptide business is growing and expanding, and our team is poised to deliver another record year in 2023.

So with that, let's go ahead and open it up to questions.

Yes, thanks. Good morning, everyone.

Good morning, Adam.

Good morning. Randy, I was hoping to start in the Feed segment in the quarter and just make sure we understood kind of the drivers of that decline.

You gave some color around it. But segment profit was down -- EBITDA was down a little over $50 million quarter-on-quarter.

And I was hoping you could kind of break apart some of the key factors that you kind of alluded to in terms of Valley and FASA and Currency. And as we think about the go forward just how much of those should be kind of cleared out of the system as we get into the fourth quarter and here maybe have more constructive operating environment given commodity prices?

Yeah. No.

Fair enough, Adam. I fully understand everybody trying to reconcile the Feed segment after the really rock star performance in Q2.

Q3 is always a bit of a challenge for us around the world because of the summer heat. This year was as bad as I've seen it in my 20 years.

And I'll give you a little bit of input on it here. Brad talked about the FX impact of $18.4 million with the euro at $1.01.

At the end of the day with the Feed segment being, I don't know, 80% of our volume and revenue et cetera you kind of would say that 80% of that number had to go through the Feed segment in one way or shape. The FASA is a standard purchase accounting.

I think it was $8.5 million $9 million that flowed through the P&L period $9 for us. And then, when you look at Valley Proteins and I want to give really hats off credit to Rick Elrod in the operations team and Royal Winter and the Valley team that are becoming part of the family.

Those plants as we told people were not well taken care of. It was a business that was being set up to transition.

And we're in the process of rebuilding about 15 different plants there in one way shape or form. And when we got hit with excessive amounts of raw material this summer as different markets open and close for the poultry producers, 100-degree weather made for incredibly challenging, problems of operating those plants.

And that -- I can't really -- I do know that number, I won't put it out there but let's say it was significant of what was unable to be processed but you pay for the raw material, and you don't get it through your plant and a very significant amount of money. It also happened in the Midwest to us, as we've never seen a summer as hot as it was in the Midwest this summer and the fall in stock business.

As we referenced in the script Adam, we talked about the -- when perishable products degrade in summer heat, it's very difficult to get the fat to separate from the protein. So you leave more fat in it your yields aren't as good.

And oh by the way the fat has higher free fatty acid content. And really DGD3 was not in position yet to take those fats.

And so we didn't have a market to move them to other than to different feed markets and you can do the corn equivalent that we've done 10 years ago and they had to be discounted substantially from what their renewable diesel value should and could have been. So I think I want to leave everybody with and not glossing over, but I want to leave everybody with that's behind us.

I've seen the results coming in around for period 10 here. The weather's cooled off and the Valley plants are back really online.

The team has done a great job there and we'll pick up as we said momentum for the balance of the year and we don't see anything changing in 2023. We have an aggressive CapEx program geared firsthand at making those Valley plants more reliable.

And that's really our focus right now is reliability and efficiency there. And then they'll be a strong contributor as we've thrown out there for next year.

And at this time we haven't really stepped forward and giving guidance for 2023. We want to see DGD3 come online, make sure we've got everything working well there and then we'll step forward and look in our crystal ball and then tell you but I – in the core ingredients business, we see continued strength around the world, very little slowing of any type of raw material or demand for any of the products.

Clearly, the fat market is really pretty, pretty solid out there as we see it. So Adam, I hope that answered as much color as I can give you?

It's really helpful. And if I could ask a follow-up along those lines then so the EBITDA guidance for the full year was reiterated.

I think if I heard your prepared remarks, 800 million gallons of DGD $1.10. So it implies about $140 million of EBITDA contribution your share in the fourth quarter.

It wouldn't seem like there's a big implied step-up in 4Q in the core ingredients businesses from the third quarter level and we talked about purchase accounting, which I think would go away. And clearly, the Valley business and some of your core rendering businesses had summer heat pressures that wouldn't persist into the fourth quarter.

So I just want to make sure I'm thinking about kind of the sequential in fourth quarter that doesn't seem all that big based on where your EBITDA guidance is?

The team around are always smiles when you do the math because they know that my middle initial is C and it stands for conservative. So at the end of the day, yes I mean you're backing into the correct numbers right there.

But I think at this point in time, as we said we've got two more periods to go through here but it feels solid. I think Q4 will be much improved over that.

And Sandy anything you want to add on DGD3 and $1.10 for the year?

I think that's really solid results from DGD. We're excited to have DGD3 online here, that will come online this month.

I don't get so close to it. And the great thing about DGD is we continue to sophisticate that organization both in terms of our feedstock origination, which I think is amazing.

We've done just a tremendous job in terms of that and I have to give our team kudos on that. And then really we expanded our finished product sales as well.

So just a great shot out to the DGD team on that.

All right. Very helpful.

I’ll pass it on. Thanks.

Thanks and good morning, all. Staying on the Feed segment.

Could you comment on the potential earnings power of the Miropasz transaction with you understand the earnings in the near term would be compromised by higher energy costs? Also what potential synergies do you see with the operations as you integrate this into your home?

Hey, Derrick, can you repeat your question?

Absolutely. So staying on the Feed segment.

could you comment on the potential earnings power of the Miropasz transaction with the understanding that earnings in the near-term would be compromised by higher energy costs? Also what potential synergies do you see with their operations as you integrate Miropasz into your own operations?

And it just spreads us out with more opportunity in Poland. And as we've said as the – the European Union comes under pressure on animal production and manure disposal, whether it's in the Benelux countries or Germany, both Poland and as we look forward, Spain will become more important into that portfolio.

John, anything you want to add?

Yeah, I think the last half of your question involved whether or not we're able to adjust higher energy prices. And I think beyond a mirror pause answer, this is largely a Darling answer.

The fact of the matter is our margin management tool that we use in this company really allows us to reflect higher energy costs and maintain our margins in the business. And that's kind of a hidden story about Darling whereas higher energy fasted impacted many, many businesses around the world.

The fact of the matter is, how we manage our business allows us to really deal with those higher energy costs without substantially impacting the bottom line of the company. So we are positively the same as the rest of our organization.

Yeah. And I think Derick, I mean clearly, we've seen Poland energy prices escalate much faster and higher than the other parts of Europe.

But at the end of the day, we are able to manage the raw material as John says. And margins in the meat production business remain fairly good and we're able given our model and our relationship to adjust for not only labor, but energy and diesel prices.

Terrific. And then as my follow-up kind of staying on the same topic, but shifting over on the fuel segment.

I recall that you guys had spent quite a bit of time in Europe over the last quarter and you guys noted that in the prepared remarks as well. In light of the energy prices we're facing there, could you speak to the near- to medium-term outlook for that business and where you see the greatest opportunity for growth?

Talk about Green Energy in Europe, John.

Yeah. This is John.

So this is one of our key platforms that we've been really dynamically growing over the last two to three years and still have a lot of growth plans on the Board not necessarily acquisitions, but stuff we can do to kind of expand our core business. It is so well related to our activities.

It allows us to help with our meat slaughter byproducts as well as opens us up to a whole new raw material stream with the organic food waste that we traditionally don't render. And the platform in Europe both from a pricing and natural gas as well as the green programs that are embedded in RED 2 and coming in RED 3 are just perfectly tailored for that business.

And this is another example. I think where I'm proud of Darling because we've been on the leading edge of this.

We've been expanding and growing this business well before everybody else thought that being in the digestion business was cool in Europe. That now we've come and built a tremendous platform in both Belgium and the Netherlands in relationship to this and we're really, really excited about what it can do for our business model over there.

That’s helpful. Thanks again for taking my questions.

Good morning. Thanks for the questions.

Just wanted to circle back on the Feed segment outlook. So you previously indicated FASA had around $100 million EBITDA annually.

Valley was expected to contribute $60 million to $70 million in 2022, which works out to about $8 million per month. So I just want to confirm, when we think about the fourth quarter, do these businesses return to that run rate?

And then is the $150 million EBITDA outlook for Valley next year still appropriate?

Yeah. Tom, this is Randy.

Yeah, I was trying to say that in so many words. So I'll say yes to your answers.

I mean, there were several one-offs going on with the Valley plant during really period eight and period nine with the summer. Those will come back.

They're going to pick up momentum. We're making adjustments in that business.

And yeah, we're -- those are both numbers that we've put out there before $150 million for Valley and the FASA acquisition rate was that $100 million EBITDA. So yeah, those are real numbers for next year.

And we're at the run rate now in period -- in Q4.

Great to hear. Thank you for that.

And then I just wanted to ask on next year. I mean, maybe it wasn't formal guidance, but I think earlier this year, you discussed the potential for $1.8 billion to $2 billion EBITDA for the business in 2023.

I guess as we think about the current operating environment, are there changes in the industry pricing environment needed to hit that range, or just given current operations and internal improvements that you are instituting at these acquisitions is that still a reasonable consideration?

Yes. I mean we're what are we at -- at 45 days 50 days now from 2023, we're carrying pretty solid momentum.

I mean not a pretty solid. We're carrying momentum in.

And if you look at the base business, and you take the Valley and FASA and where we're going to finish this year, yes it's not hard to get a $1.2 billion number out of the core ingredient business where pricing is today. If you -- depends on what you want to put on your -- on the dark board here on DGD.

We know we've got capacity to around 1.2 billion gallons, and we averaged $1.09 or we'll average $1.09 $1.10 this year. So then you're sitting there going okay, that's $1.32 billion.

We've got a couple of turnarounds that are going to have to happen next year early, and work through that. And then the bigger better machine, with working capital.

And so yes, I mean at the end of the day, you can sit there and look at it and say you added 1.2 and 650 you get 1,850. I guess if we were snapshotting it today, that's where we would put it out there.

Okay. Thank you.

Hi, good morning, guys.

Good morning.

Let me ask a question, in a different way. If you didn't have the acquisitions, would you -- would the Feed business be sequentially flat?

You mean sequentially, okay could we...

There might be some slightly down, just because of the seasonality, but my sense is that it probably would have been more aligned. The acquisitions team in my mind to have changed just this quarter.

Is that -- I mean would you not said that the profitability for Feed would have been largely flat, maybe slightly down?

Let me answer it in a different way, and just say, FASA and Valley really didn't contribute in Q3 to us.

But what I'd say, that they were -- a negative. I guess the sense that they might have been negative through the quarter.

Together they were minimal.

Minimal. So I wouldn't say, negative and then you've got the currency piece there.

And then you've got the -- really the fat price degradation that happened from the downgrades of the yellow grease. And that's why Ken, we're trying to say that Q4 is going to be much better.

Okay. And the base cases for both those -- or the business case for both of those are still intact for 2023.

There's nothing that happened this quarter, that would alter the business case for either one of those. Is that a fair statement, or am I...

Absolutely. I mean, we want to reaffirm it.

We still think that the Valley in -- I mean FASA was a one-off with the inventory mark-to-market and unwinding some hedges and stuff down there. And at the end of the day the Valley, is just an operational challenge.

It's been overcome. Lots of changes have been made.

And summertime rendering is difficult, when you know what you're doing let alone, when you have plants that aren't ready to run in the summer and wastewater units. So, that's behind us, cooler temperatures make it easier.

So between now and next summer, we've got a capital program in position to fix many of those plants and those challenges that we had. And so yes, it's behind us.

We're at the run rates. We're at the business case where we thought we would be.

And I thank God, September is over.

And then a lot of CEOs in our space, have had a wide variance of discussion -- discussing the Inflation Reduction Act. There is one CEO who says this is life-changing and there's other CEOs of whose like it's more kind of an evolution.

Can you give us your view on how inflation reduction would change Darling's model, over the next two to three years? Is this a game changer?

Is this something that's slightly positive, or is it neutral? Just kind of trying to figure that out.

There has been again a pretty wide variance of commentary by CEOs in our business.

So Ken, this is John. I will say from Darling's perspective, the Inflation Act is the most supportive piece of legislation, we've ever seen in the history of this company.

Hands-down, bar hole is nothing. It's perfect for us, because we are positioned as guys that have the integrated feed stream of waste fats, feeding into renewable fields.

And what's now happened, is that the federal program now recognizes the value of low-carbon fuels, as opposed to not really rewarding if you were producing a lower carbon field. Now it does.

And so the result from a Darling perspective, it was a wonderful piece of legislation. We were fully supportive.

Getting five years was great. We are very appreciative that the federal government went in that direction.

And I will tell you from Darling's perspective, we love that program. We think it's absolutely phenomenal and great.

Brad, why don't you comment to Ken on the tax side of how that all could work?

Yeah. Good morning, Ken.

So as you probably know I mean, we said it earlier, it goes from an excise tax credit to an income tax credit after 2024. So the next two years, nothing changed in terms of the P&L.

After that John touched on the benefit from producer's standpoint, but it also goes to an excise tax credit. So it's going against your against your tax liabilities or your tax bill if you want to put it that way.

So from a cash perspective there's a bit of a delay there offsetting of your say quarterly estimated tax payments. But really when you -- one of the bigger things from an investor standpoint is really as we talk about it internally or start -- begin to think about, it really we become more of a I dare say a bit more of an EPS oriented company with it going down below the line.

And the other thing is it's going to be more geared toward the CI score and I think that's also what John was referred, which is definitely beneficial to us because it's just going to get more benefit. And I guess John you already addressed that.

But -- yeah.

Let me just add back on top of this. This is a producer’s tax credit.

Obviously we're the guys that have built the unit that convert waste fats to low-carbon fuels in the United States, which means we're producing in the right area to be able to maximize the benefit associated with this. As I said hands down the best piece of legislation I've ever been for Darling in the history of Darling.

Okay. Life changing it is.

My last question is on Diamond Green Diesel, it sounds like that you guys have shifted to using soybean oil. How much can you use -- how does that work?

And does that have an impact on the business? How do you think about that?

And maybe I'm wrong, but it seems like that's been the shift. And what is the business decision based on?

Yeah. So I think we don't typically give out an exact percentage of any of our feedstock.

And traditionally and really going forward, we are always a waste feedstock user. That's our primary feedstock.

That's really the premise of what we built with Diamond Green is to take and use the waste feedstock, because they typically give us the highest value in terms of CI scores, et cetera. They're typically the most preferred so different customers want that.

And so that's what we focus on. That doesn't mean to say that on occasion, we don't use soybean oil because there are sometimes in the market where soybean oil after you adjust for CI scores and things like that and there are markets that do like soybean oil that we run that.

And so we do. We are constantly a profit maximizer.

And on occasion when that happens when the stars align, we will use soybean oil. And then there are operational reasons that we use soybean oil too.

So on startup that's an important thing for us to use in a certain stage of our process. So again just for clarity, we are by far just a waste oil, we focus on the waste feedstocks.

But on occasion we will run some soybean oil.

Yeah. And I think that's fair Sandy.

I mean I know Nestle throws 96% or whatever waste oils, we're probably way above that. But time-to-time if the foodservice business goes to go slow out there then the soybean guys are trying to move volume.

And from time-to-time either operationally or if animal fats go sky high and you get a $0.05, $0.06 discount on bean oil then you've got customers that you can arbitrage in and maximize the facility.

Great. I appreciate as always guys.

Thanks guys. We appreciate everyone's time today and hope you stay safe.

I look forward to seeing at the upcoming events that are listed in our presentation on the earnings slide deck and we'll talk to you soon. Thank you.